‘It’s not perfect’ Cosatu admits, but it’s still pleased with the new minimum wage

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The minimum wage has been increased by 4.5% but will it make much difference?
The minimum wage has been increased by 4.5% but will it make much difference?
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This week, government announced an increase in the national minimum wage (NMW) of 93 cents per hour.

Effectively, this means the NMW will increase from last year’s rate of R20.76 to R21.69 per hour from 1 March – an increase of 4.5%.

Cosatu’s parliamentary coordinator, Matthew Parks tells Drum overall they are “pleased”.

“It’s not perfect – it’s not the living wage. But in a country with a high unemployment rate, workers are on the back foot,” he says.

“We are pleased with this year’s increase for a couple of reasons. One is that the minimum wage has increased by 4,5%. We know how bad the economy has been doing this year and last year, so this is a positive achievement.

“In an economy with a 50% unemployment rate, there are compromises that have to be made to cater to all job sectors to avoid potentially displacing people through job losses. Often farmworkers, gardeners, and domestic workers are the first ones to get retrenched.”

But equally, Parks says you don’t want the increase to be so low that it doesn’t make a difference in terms of uplifting people and paying them enough to buy food and to take care of themselves.

“It’s going to be a transition,” he says.

“The minimum wage commission will be doing research now, as part of the agreement to look at a medium-term target – a more significant increase – to see what levels it could be, what the economy could afford, and taking into consideration different sectors of the economy”.

Read more | We can no longer ignore the effects of the minimum wage and other bad laws

What is the NMW?

South Africa’s high wages inequality meant a NMW (an amount below which no employee should be paid) was needed to try to level the playing field to some degree. The act came into effect in January 2019 with a minimum of R20 per hour.

Initially, it was considered too disruptive to cover all wages, and farm workers and domestic workers were two of the main groups that were excluded.  The idea was that their wages would increase over time to eventually reach the NMW.

This year’s increase has seen farm workers catch up and they will be paid the NMW of R21.69 per hour.

Domestic workers didn’t quite get there – their NMW will be R19.09 per hour. But it was “expected to be aligned with the NMW when the next review is considered”, the Department of Employment and Labour said.

Another sector that still falls behind the NMW is workers employed on an expanded public works programme. They will be entitled to a new minimum wage of R11.93 per hour.

Certain other salaries that were already at or above the NMW will increase proportionally to the adjustment.

“Therefore, the contract cleaning and wholesale and retail sector will also have their wages upwardly adjusted by 4.5%,” the department said.

Read more | Your guide to compensating your nanny (and tips for nannies on asking for a raise!)

The effects of the increase

Domestic workers’ salaries were hiked by 23%, which sounds like a lot, but how much difference will it make to these workers’ lives?

Food prices are one of the things that affects poorer households the most and therefore, they are a good measure.

If we look at figures from the Household Affordability Index, the average cost of a monthly food basket is R4 051. (This basket was designed with women living on low incomes around the country and includes the foods and the volumes of these foods which women living in a family of seven members typically try and secure each month.)

The same index put the cost of basic or “core” food items at R2 194 – but this was just food and did not include domestic and personal hygiene products, which it estimated would cost another R698.

If we relate these to a domestic worker’s salary at R19.09 per hour, the daily rate will be R152.72, with a monthly rate of 20 working days at R3 054.40 – below the full basket price.

The new salary will cover the core food items and hygiene products but it still leaves little scope for other costs such as schools, transport, and housing.

On a positive note, government had a word of warning for employers too.

“It is illegal and an unfair labour practice for an employer to unilaterally alter hours of work or other conditions of employment in implementing the NMW. The NMW is the amount payable for the ordinary hours of work and does not include payment of allowances (such as transport, tools, food or accommodation), payments in kind (board or lodging), tips, bonuses and gifts,” it said.

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